TMI Blog2012 (12) TMI 699X X X X Extracts X X X X X X X X Extracts X X X X ..... o multi storied residential building by name "Nikunjam Apartments" - the builder shall commence construction within 30 days from the date of entering the schedule property for the purpose of construction (clause 6.1). Further it is the responsibility of the builder to obtain necessary approvals. It is also mentioned in clause 2 of the agreement that the assessee has executed a registered general power of attorney in favour of the builder on the very same date, i.e., on 14.4.2002 - CIT(A) was right in law in confirming the action of the assessing officer in assessing the capital gain in the assessment year 2003-04, since the development agreement was entered into on 14.4.2002. As assessee already declared capital gains in the assessment years 2005-06 and 2006-07 and hence the sale consideration declared in those years are required to be excluded in the assessment year 2003-04 - the right course for the assessee would be to approach the tax authorities for exclusion of the income, which was wrongly offered by him in the subsequent assessment years Deduction u/s 54/54F - Held that:- The assessee is urging this plea for the first time set aside this matter to the file of the AO w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee has extracted the reply dated 18.5.2007 given by the AO on the reasons for reopening of the assessment for the assessment year 2005-06. "Further, as per agreement dated 14.4.2002 executed by you in favour of M/s Nikunjam Constructions (P) Ltd, you have sold 40 cents of land in Sy Nos. 227, 228, 250 252B/4 of Kadakampally village for a consideration of flats area extending 7800 Sq.ft. plus Car park area Rs.1000/- per sq. Ft and cash of Rs. 18,00,000/-. Thus total sales consideration comes to Rs. 1,01,00,000/-. Though the agreement was executed on 14.4.2002, the possession was handed over to the developers on 21.4.2004. Since the handing over of possession of land took place on 21.4.2004 the capital gain has to be assessed for the assessment year 2005-06. But you neither filed your income tax return nor disclosed any capital gain. Therefore, it is proposed to assess the capital gain on transfer of immovable property in assessment year 2005-06. Your explanation/objection in this regard may be filed." Based on this letter, the assessee is now contending that the AO, having decided to assess the capital gain in the assessment year 2005-06, he could not have assessed the sam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sale consideration already declared by the assessee in the assessment years 2005-06 (Rs. 34,74,839/-) and 2006-07 (Rs.14,00,000) for the very same property. 7. The first point pertains to the fixation of "material date" for the purpose of assessing the capital gain. There is no dispute with regard to the fact that the assessee has entered the agreement on 14.4.2002. As per clause 1.2 of the said agreement, the builder would commence the development of property on the delivery of the possession of the land. However, in the said clause, it is also mentioned that "provided however that nothing herein contained shall be construed as delivery of possession in part performance of this or any agreement of sale". Further as per clause 5.2 of the agreement, the possession of vacant land was handed over the developer only on 21.4.2004, i.e., upon receiving the assessee's portion of constructed area. Accordingly, it is contended by the assessee that he has not given possession of the land as contemplated in sec. 53A of the Transfer of Property Act. It is the contention of the assessee that the possession was handed over only on 21.4.2004. 8. In this regard, we may extract below the releva ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on to a capital asset, includes, ** ** ** (v) any transaction involving the allowing of the possession of any immovable property to be taken or retained in part performance of a contract of the nature referred to in sec. 53A of the Transfer of Property Act, 1882 (4 of 1882); or (vi) any transaction (whether by way of becoming a member of, or acquiring shares in, a co-operative society, company or other association of persons or by way of agreement or any arrangement or in any other manner whatsoever) which has the effect of transferring, or enabling the enjoyment of, any immovable property." 12. On a careful reading of the agreement dated 14.4.2002 entered between the assessee and the builder, we notice that the said agreement is a development agreement, under which the builder has agreed for the development of the schedule property into multi storied residential building by name "Nikunjam Apartments". 13. The year of taxability of the capital gain in the case of development agreements came to be considered by the Hon'ble Bombay High Court in the case of Chaturbhuj Dwarkadas Kapadia v. CIT [2003] 260 ITR 491. It is pertinent to note tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce of the contract thereafter does not arise..... If the contract, read as a whole, indicates passing of or transferring of complete control over the property in favour of the developer, then the date of the contract would be relevant to decide the year of chargeability." In the instant case also, the builder shall commence construction within 30 days from the date of entering the schedule property for the purpose of construction (clause 6.1). Further it is the responsibility of the builder to obtain necessary approvals. It is also mentioned in clause 2 of the agreement that the assessee has executed a registered general power of attorney in favour of the builder on the very same date, i.e., on 14.4.2002. Hence, the impugned agreement, being a development agreement, a mere mentioning in one of the clauses of the agreement to the effect that there is no handing over of possession, in our view, shall not take away the actual fact that the physical possession was handed over to the builder. 14. According to the assessee, sec. 53A of the Transfer of Property Act has under gone changes and according to amended section, the unregistered documents shall not fall in the purview of sec ..... X X X X Extracts X X X X X X X X Extracts X X X X
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